First impressions are critical in business.
Whichever side of the table you’re sat on, the initial meeting between both parties will set the tone of the discussions to follow. It’s therefore vital to establish a good rapport, and quickly.
Sounds like a lot of pressure, doesn’t it?
If you’ve gone through the motions this far, you’ll know by now that businesses changing hands can be stressful. It doesn’t matter whether you’ve done this once, twice or a thousand times… Walking into that room is likely to feel daunting.
To help you get the deal you want, it makes sense to be prepared. You’ve done your homework so far. Don’t stop now.
Having been through plenty of sales, mergers and acquisitions myself, this blog is designed to guide you through what to expect from that first meeting and why it matters. Read on to get ahead of the game.
Why The Initial Meeting Matters
The initial meeting is usually scheduled when the buyer is seriously considering making an offer to purchase the business. Depending on the seller’s route to market and the buyer’s approach to finding a suitable acquisition, much of the necessary groundwork may already be done.
Meeting together in person is the next step that allows both parties to establish the others’ objectives in depth. Both optimistic sellers and prospective buyers need to navigate the initial meeting well to make sure they get what they want.
For the buyer, purchasing a business is a huge financial commitment. It is on their head to do due diligence and dig into financials, but a healthy amount of trust is also involved. A prospective buyer must feel positive that their ownership of the new business is destined for success.
On the other side of the table, the seller is also looking for a substantial level of trust. They have likely spent years building their business, and handing it over to a new owner is hard.
Will the new business owner manage it successfully?
Though it might seem that the seller is taking less of a financial risk, their net worth is often tied up in the business. A fair price is important to them and may also influence their retirement plans.
It’s easy to see then, that the success of this get-together is invaluable to making positive progress for both parties.
4 Rules For A Successful Meeting
1 – Warmth And Respect
You might be keen to launch straight into business talk but a warm introduction and friendly chat are integral to building rapport and trust from the outset. Expect and encourage the same from the other party, and aim to keep that level of mutual respect throughout the whole process.
2 – Appreciation For The Other Party’s Position
Demonstrating that you understand the person behind the business deal is vital to a good relationship.
Sellers have usually put their blood, sweat and tears into their business so it’s likely that they will react emotionally at some point. What is important to them post-sale? Counter their worries by loosely outlining your plans going forward, reinforcing why you are a ‘safe pair of hands’.
Buyers, on the other hand, are likely making the biggest financial commitment of their lifetime. Their diligence in dotting the I’s and crossing the T’s might feel intrusive, but it comes from a place of vulnerability. Help them overcome their fear by offering up as much information as you can.
3 – Be Considerate
Negotiations don’t need to be fraught. Employing an open attitude will transform the process.
If you’re the seller, consider what the buyer is demonstrating a need for with their demands. What are they asking for? What is important for them to know and have, for them to feel satisfied with this deal?
4 – Personal Clarity
Both parties must be absolutely clear in their understanding of what the perfect deal looks like for them. However, it is also important, as we’ve worked through above, to allow fair consideration and wiggle room.
Working out what your must-haves are, and what can be negotiated deeper, prior to the first meeting is hugely beneficial. It means both parties can establish the others’ true objectives right from the off, without wasting time.
Preparation Tips – Buyers
You will have researched the business at a basic level already. Make sure you’re familiar with the information at hand, and where it sits in the documents in front of you, to save time flipping through pages.
Assuming a Non-Disclosure Agreement hasn’t already been signed, don’t expect a seller to release confidential information. Prepare an NDA if there isn’t already one in place.
Think about questions you want to ask ahead of the meeting so that you get as much out of the time together as you can. Writing them down might be useful.
Preparation Tips – Sellers
Expect key questions to be asked, in depth, and prepare to answer honestly (upon having signed an NDA).
Be clear on what you want. It’s a waste of time for everyone involved drawing in a buyer when you aren’t sure what you’re after. Do your business justice from the outset.
So, there we have it.
The initial buyer/seller meeting is just one step in the journey of a business changing hands.
Whether you’re the buyer or the seller, preparation is key to a successful first meeting and everything that follows. Establishing good rapport and being clear on what you want is vital.
Got your initial meeting lined up? I know what works and I want to hear from you. Book a call with me today and I can set you on the path to a great deal.